The World’s Most Expensive Haircut

Many industries appropriate words for their own devices, but their peculiar internal language doesn’t permeate through to the masses. But there are occasions when a piece of linguistic jargon breaks free, and the current financial crisis in the Eurozone is one such example.

All over the UK, newspapers have been debating – what do you think about the haircut?

Now you could be forgiven for thinking that this is no time to be focusing on coiffures and tints, and you would be right. But of course this isn’t really about a visit to the local salon. This is about well-established financial jargon hitting the mainstream.

Understanding it is somewhat harder. The online Financial Dictionary defines a haircut as the value to securities used as collateral in a margin loan. And lots of other stuff as well. I’ll be testing you on that shortly.

I have had it explained to me a lot more simply. Basically, if I lend you £100 and then take a 50% haircut, as the European banks have, I can only expect to get £50 back. Take that, securities and collateral.

But what has actually been irritating about the coverage is the way that haircut has been liberally sprinkled throughout media reports in a kind of knowing way, without it really being defined properly. It confers a kind of legitimacy on the writers and creates the sense that they are in the know and are experts. They must be, just look at the way they effortlessly use the jargon. Many journalists would have been a lot better just avoiding the term and finding a cleaner way to express their thoughts. Hiding behind the jargon is sometimes plain lazy.

But maybe Wordability should campaign for more haircut-related financial terminology to enter common speech. Should commentators have been discussing whether the European banks should have accepted a trim, a short-back and sides or maybe a perm? Who needs to talk in percentages when you can talk in split ends instead?

Or maybe another term connected with cutting things off would have been more appropriate. But I’m not sure that headlines about the kind of circumcision the banks were going to get would really have worked.